income tax

2 ENTRIES FOUND:

income tax

noun

: a tax paid on the money that a person or business receives as income

Full Definition of INCOME TAX

:  a tax on the net income of an individual or a business

Examples of INCOME TAX

  1. Federal income tax will be deducted from your pay.
  2. The new law will lower income taxes for most taxpayers.

First Known Use of INCOME TAX

1799

income tax

noun    (Concise Encyclopedia)

Levy imposed by public authority on the incomes of persons or corporations within its jurisdiction. In nations with an advanced system of private enterprise, income taxes represent the chief source of government revenue. Income tax levied on individuals or family units is known as personal income tax. In 1799 Britain enacted a general income tax to finance the Napoleonic Wars. In the U.S. an income tax was first tried during the Civil War; the Supreme Court held it to be constitutional in 1881 but declared another income tax unconstitutional in 1894. In 1913 the 16th Amendment to the Constitution made the personal income tax permanent. The fairness of personal income taxation is based on the premise that one's income is the best single index of one's ability to contribute to the support of the government; most personal income taxes are conceived on the theory that when people's financial circumstances differ, their tax liabilities should also differ. Thus U.S. income taxes are progressive taxes, falling more heavily on those who earn more money, and individual income tax deductions are allowed for items such as interest paid on home mortgage debt, unusual medical expenses, philanthropic contributions, and state and local income and property taxes. Enforcement has been facilitated by withholding the tax from wages and salaries. See also capital gains tax; capital levy; corporate income tax; regressive tax; sales tax; value-added tax.

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